3 things that will change the world today

Send me interesting reports, magazines, promotions and exclusive content from the Verdict group

You are in control of the communications you receive from us and you can update your preferences anytime to make sure you are receiving information that matters to you.
Please check our Verdict Privacy Policy to see how we protect and manage your submitted data.

Novogratz predicts that a big financial firm could offer cryptocurrencies as investment options, in the next six months, though he declined to say which company it would be. He believes this will have big implications for the price of bitcoin.

He said:

The institutionalisation of this space is coming. It’s coming pretty quick. When it’s that easy, the price of bitcoin or Ethereum is going to go much higher. And that is a lot closer than people think.

Bitcoin volatility

One of the major criticisms of bitcoin is how volatile the cryptocurrency is. Last week, bitcoin hit a record high of $7,879.06 before facing a massive sell-off over the weekend. The currency started trading at $5,857.32 on Monday and has now risen to over $6,700.

Earlier this year, a research paper published by analysts at investment bank Morgan Stanley, said it’s the volatility that prevents practical use of bitcoin.

Morgan Stanley analysts said:

Most regulators and investors view cryptocurrencies more as assets than actual currencies. Their values are too volatile and too hard to actually use for payments for most to consider them currencies.

Our conversations with some merchants indicate that, while cryptocurrencies might actually be attractive for them to operate their business, they find that the cryptocurrencies are far too volatile to be used.

Prices of digital currencies have been on a rollercoaster ride lately but this violent volatility is actually all a bit of a sideshow. The simple reason is that plenty of people hold billions of pounds worth of cryptocurrency right now at no risk.

3 Things That Will Change the World Today

Get the Verdict morning email

That’s because they are using hedging or short positions to cover losses that might occur before they are able to convert their money into pounds and pence. This is common practice for businesses using traditional currencies and it’s no different for bitcoin or any other digital currency.

Bitcoin isn’t the only cryptocurrency with issues

Ether, the cryptocurrency backed up by the Ethereum blockchain, saw one of its popular wallets frozen last week. This incapacitated around $280m of crypto tokens.

Startups often use Ethereum for initial coin offerings (ICOs), a form of fundraising using ether tokens. One startup, challenger bank Fiinu, was going to raise money through an ICO last week before it was blocked.

All the [pre-ICO] money has been blocked within this Ethereum problem at the moment. We are intending to return all the money to investors, 100 percent, but the trouble is right now all the assets are frozen.

Despite the setbacks, Sjoblom is positive about how cryptocurrencies will develop once they go mainstream.

“We are really in the infancy of major changes. In the next five to 10 years, we will see the opportunities and challenges of blockchain as a whole grow.”